President confident of more unity after successful Durban summit

The Fifth BRICS Summit in Durban, South Africa, proves the group is developing into a global force able to tackle a range of economic and political issues, with the five major emerging economies inking agreements on new business and finance cooperation arrangements, analysts said.

At the summit of Brazil, Russia, India, China and South Africa, President Xi Jinping expressed his confidence on Wednesday at the prospect of greater cooperation among the world's leading emerging economic powers despite the global slowdown.

BRICS leaders, from left, Indian Prime Minister Manmohan Singh, President Xi Jinping, South African President Jacob Zuma, Brazil's President Dilma Rousseff and Russian President Vladimir Putin display a united front at their summit in Durban, South Africa, on Wednesday. [Photo/Agencies]

"Slower economic growth doesn't imply a downhill path for BRICS. On the contrary, the development potential is very promising," Xi said.

It is just five years since the BRICS were established, he said, and it is still at a developmental stage and should focus on boosting ties.

Improving the standard of living for 3 billion people will create massive opportunities, Xi said, and he called for major cooperation projects.

"The potential of BRICS cooperation has not yet been fully explored," Xi said. Trade volume among the five countries only accounts for less than 1 percent of the global volume, he added.

He encouraged Chinese entrepreneurs to be more involved in the economic development of other BRICS countries, and welcomed their counterparts investing in the Chinese market.

"The BRICS and Africa should be closely integrated and promote Africa as the new highlight in the global economy."

Xi also called for regular meetings among BRICS leaders, and urged them to listen to the BRICS Business Council, which was established during the two-day summit and will be a chief mechanism for dialogue among member countries.

The council will operate under five representatives from each member country, all on equal footing, and will operate without a fixed leadership structure.

"It will be similar to the World Trade Organization only on a smaller scale, and it will aim to resolve trade and commercial disputes," said Cao Heping, a professor of economics with Peking University.

"It can also act as an administrative body if a Free Trade Zone is established under a BRICS mechanism," he added.

The summit also witnessed the signing of agreements on financing for a green economy and infrastructure in Africa, as well as the establishment of the BRICS Think-Tank Council.

In addition, a new consensus was reached in the founding of a common development bank, which aims to provide credit support for infrastructure projects, though details on funding and location of the proposed bank have not been disclosed.

"We have decided to enter formal negotiations to establish a BRICS new development bank based on our own considerable infrastructure needs, which amounts to around $4.5 trillion over the next 5 years, but also to cooperate with our emerging market in developing countries in the future," said South African President Jacob Zuma.

The five countries also announced that they are mulling over a $100 billion Contingent Reserve Arrangement among BRICS countries, asking their finance ministers and central bank governors to continue working towards the establishment.

The arrangement will have a positive precautionary effect, guard the BRICS short-term liquidity pressures, and enhance financial stability, complement existing international arrangements as an additional line of defense, said the Durban Declaration announced at the summit.

Nicola Casarini, a research fellow at the EU Institute for Security Studies, said China increasingly views the BRICS as a forum to discuss global economic and political issues and as an alternative to those forums usually dominated by the Western powers.

"But the sound development of the BRICS forum still depends on benign interplay with other mechanisms such as G20, and should serve as a supplement instead of a replacement," said Yu Jianhua, a scholar on International relations at the Shanghai Academy of Social Sciences.

Cao Heping, a professor of economics with Peking University, said the group has the potential to reach even bigger agreements. "Economic cooperation among BRICS countries shouldn't stop at establishing a common development bank, but should push on for a Free Trade Agreement," Cao said.

Such an agreement could start with the coordination foreign exchange mechanisms, followed by common tariffs and eventually trade settlement in a single currency.

In addition, Cao suggested, the future cooperation mechanism shouldn't necessarily be constrained by the concept invented by Goldman Sachs chief economist Jim O'Neill in 2001, but should look at introducing more countries.

"The level of inter-regional investment remains low," said Feng Shaolei, an expert on Russian studies at East China Normal University.

Contact the writer at [email protected]

Qin Jize and Zhang Chunyan also contributed to this story.